After Indusind Bank, Bandhan Bank is the second lender in this earnings season to report a hit on the IL&FS exposure.

Private sector lender Bandhan Bank Thursday reported a hit in profit growth for the December quarter with a 10 percent uptick at Rs 331 crore due to the provision for its IL&FS exposure.

The microlender-turned-bank set aside a whopping Rs 385 crore in provision for its exposure to the troubled infra financier, which dented its profit. The bank did not disclose what's its exposure to the crippled infra major, though.

"We used to always take unsecured exposures. This was an experiment on a secured lending to a AAA-borrower which has gone bad," managing director and chief executive CS Ghosh told reporters here.

Bandhan is the second lender in this earnings season to report a hit on the IL&FS exposure. Wednesday, larger peer Indusind Bank too had reported one of its worst quarters in year due to its Rs 3,000 exposure to the infra major with a 5 percent bottomline growth.

Bandhan Bank, which took over the HDFC arm Gruh Finance in an all-stock deal earlier this week, has recognised the IL&FS account as a non-performing one, pushing up its gross non-performing assets ratio to 2.4 percent, he said.

Lending to the troubled asset happened in two tranches in the last two years and this was the largest bet taken by the bank in its history, Ghosh said,adding there is no other infrastructure account which is over Rs 25 crore on its book.

Of the overall provision of Rs 474 crore, IL&FS accounts for Rs 385 crore, he said, adding barring this, the provisioning has been maintained at just about Rs 90 crore.

Even as investors have been circumspect about it, Ghosh said the merger with Gruh Housing Finance will help the lender over the long-term and hoped the investors will realise the same. Since the merger announcement, it stock has taken a big beating, shedding over 10 percent.

But following the earnings announcement, the Bandhan counter gained almost 4 percent at Rs 471.70 on the BSE, as against the benchmark Sensex losing 0.4 percent Thursday.

After the one big setback on the infra front, it is betting on the affordable housing and small businesses front to grow its book, Ghosh said.

Net interest income grew 53.5 percent to Rs 1,124 crore, while non-interest income grew 48.1 percent to Rs 234 crore. The core net interest margin expanded to 10.3 percent on an improvement in the share of low cost current and saving account deposits and also larger proportion of assets delivering interest income.

The repayment ratio of micro-lending, which forms over 87 percent of its book, has improved to 99 percent after some difficulties earlier, Ghosh said.